Postponed floatation keeps price of Property Fund shares low

The uncertainty surrounding the listing of the Property Fund on the Bucharest Stock Exchange has allowed foreign investment funds to accumulate significant stakes in one of the richest companies in the entire economy at a much lower price than the real value.

"There are funds who like this uncertainty because it allows them to buy cheap shares in the Fund," said Dan Paul, chairman of the Association of Brokers and a shareholder of the Fund.

Four foreign investment funds, among which Swedish East Capital Special Opportunities, US-based Cartesian and UK's Coneglen, own about 6% in the Fund together now. The Romanian state holds the majority stake, 59%.

The shares have been selling via classified ads or through brokers on the Romanian market for almost two years; the transactions are hardly transparent and are not supervised. Property transfer is registered with the Central Depositary later.

The shareholders of the Property Fund initially agreed with the trading of the Fund's shares via the OTC system launched by the Association of Brokers, but later changed their minds. Meanwhile, brokerage firm Wood&Co listed derivatives with Property Fund's shares as the underlying asset on the Vienna Stock Exchange, providing a price for these shares for the first time.

The delays in the floatation of the Property Fund have allowed foreign funds to buy shares at bargain prices, thus giving the Finance Ministry some time to fix the problem of damages to be paid through the National Authority for Property Restitution (ANRP).

Alexandru Paunescu, chairman of the Property Fund's Supervisory Board said in November 2007 that "if the Fund is not listed by 31st of December 2008, I will stop being chairman." All the others who came after him in this position made public statements about the imminent floatation of the Fund on Stock Exchange. However, the Fund has not been listed yet.